State cabinet overruled finance department in populist budget

CM Prithviraj Chavan and Deputy CM Ajit Pawar

The State government has pulled out all the stops in declaring a populist budget in light of the upcoming State Assembly elections, even overruling suggestions and cautionary advice from its own administration.

Also read: State panders to businessmen in additional budget

The state finance department has been overruled in the spending spree to please voters, raising rears of serious fiscal instability and a rising debt.

Gone for broke: The state cabinet has ignored the empty coffers and created a liability for the future government, said a senior government official from the finance department. File pic/PTI

Sources in the department told mid-day that they had objected to clearing Rs 600 crore of populist proposals. They revealed that over the past month, the state cabinet cleared several proposals of the Revised Administrative Approvals in water supply, urban development and additional funds for cooperatives. mid-day had reported that the new budget had pandered to the business community, which is said to have voted against the Congress-NCP alliance in the Lok Sabha polls.

mid-day's report on the budget yesterday

Going all-out
In the cabinet meeting held at the start of this month, the political class cleared a Rs 266-crore proposal to pump money in three district central cooperative banks (DCCB) at Nagpur, Buldhana and Wardha. The proposal was passed despite finance officials calling it a case ‘not fit for consideration' on grounds that the banks had poor non-performing assets (NPA), and were under the Reserve Bank of India (RBI) scanner. "Even the cooperatives department had objected to any money flowing into these banks. But, the objections were overruled," said a senior state official.

Earlier, the cabinet had cleared a Rs 7-crore proposal to pump money into a new cooperative spinning mill at Nashik. This, despite finance department's suggestion to instead put in place a new sharing formula, which would put equity sharing between shareholders and government to 51:49 as opposed to the suggested 5:95, which meant the share of initial capital of the members would be just 5% while the government would contribute the rest. But, the state cabinet overruled the new plan. The proposal to double the transport allowance of state employees created an additional burden of Rs 255 crore, and a 10 per cent increase in family pension lead to a burden of Rs 120 crore. All these had been proposals vetoed by state finance officials. "It seems the government just wanted to create liability for the future government, ignoring the empty coffers," said a senior government official.

The budget presented on Thursday included additional spending provisions that increased allocations for expenditure to Rs 2,24,053 crore over and above Rs 2,13,462 crore estimated in the interim budget presented three months ago. However, Finance Minister Ajit Pawar assured in his budget speech that increase revenue receipts from collection of taxes would take care of any financial burden facing the government.

"It is a given practice that finance will object to revised administrative approval and the cabinet then approves it. Several of our area proposals were blocked by finance when they came for revised approval," said Buldhana MLA Gopaldas Agarwal.